A necessary healing touch

It is well known that a serious illness requiring expensive treatment can push a family that has somehow clawed its way out of poverty straight back into deprivation. Many development economists have pointed out that health shocks can hit the poor hard.

A new paper published in Lancet, the British medical journal, estimates that 39 million Indians temporarily slip back into poverty every year because of ill health. Further, the authors of the paper show that a growing number of people in rural and urban areas prefer not to see a doctor because of the costs involved. About half of hospitalization costs in the villages and one-third in cities are financed by loans and sale of assets.

Increasing incomes should ideally help Indians overcome these challenges. But the data presented in the Lancet article suggests that the proportion of people who prefer to not treat their ailments has doubled since 1995. In our view, one possible reason is that health costs have risen faster than incomes; the deflators used to calculate sectoral inflation in national income data clearly shows this.

Twenty years of economic reform and growing incomes have made a dent in India’s pathetic health profile. Child mortality and maternal mortality are inching down, for example. We are living longer and better. Data on the components of consumer spending shows that healthcare is becoming a more important part of overall family budgets, along with education, consumer goods and telecommunications. Yet, financial stress and a broken public health system expose too many Indians to unacceptable health risks.

There have been calls for India to have a universal healthcare coverage by 2020. The goal is incontrovertible in itself. Every decent society should provide healthcare access to every citizen. The real issues are budgets and delivery. Public spending on health has not grown fast enough because tax revenues are frittered away. Limited state capacity ensures that the government healthcare system is a failure.

Both issues need to be fixed. But public policy should also consider a third option: of innovation led by the private sector that helps drop costs of hospitalization and surgical procedures. The private sector needs to complement the public sector in providing healthcare to every Indian.

How can India’s healthcare break out of the rut? Tell us at views@livemint.com